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Czech Republic: Protesters Accuse World Bank Of Improper Loan

  • Andrew Tully

Advocacy groups gathering in Washington for protests against the World Bank and the International Monetary Fund say the World Bank made an improper loan to the Czech Republic to help develop a nuclear power plant. The World Bank says the loan was entirely proper. RFE/RL's Andrew F. Tully reports.

Washington, 17 April 2000 (RFE/RL) -- Environmental groups are accusing the World Bank of violating its own policies by helping finance a nuclear power plant in the Czech Republic.

The bank is accused of helping finance connecting the Temelin nuclear power plant with outlying areas, and paying for a safety audit at Temelin. The plant, which was begun during the communist era, has yet to go on-line.

The charge was made on 14 April by two environmental groups -- the Czech chapter of Friends of the Earth, and the Nuclear Information and Resource Service -- and by a private monitoring group, the Central and Eastern Europe Bankwatch Network.

The groups have asked World Bank President James Wolfensohn to stop loans that help finance the project, or at least to change the terms of the loan.

Michael Mariotte, executive director of the Nuclear Information and Resource Service, told a Washington news conference that Temelin is far more than just an environmental hazard. He said the loan is the wrong kind of investment in the Czech Republic.

Such loans have angered many advocacy groups, who complain that the World Bank and its sister organization, the International Monetary Fund, hurt the countries that they profess to help. Tens of thousands demonstrated in Washington this weekend in an effort to disrupt the two institutions' annual spring meetings. The protesters hoped to have as much success as they did protesting in Seattle last autumn against the World Trade Organization.

"This loan is exactly the type of loan that has brought thousands of people to the streets of Washington this week."

None of the loan money directly helped develop Temelin, according to Roger Grawe, the World Bank's country director for the Czech Republic, Hungary, Slovakia, Slovenia, and Moldova. Grawe says the bank agreed in 1992 to loan $246 million to Prague to improve power efficiency, reduce air pollution, modernize the electrical power system, and facilitate the connection of the Czech and German power grids.

Grawe responded to the two specific accusations brought by the advocacy groups. He said the project funded by the World Bank did not link Temelin with the outlying area, but merely reinforced two electrical substations near Temelin, which is located about 120 kilometers south of Prague. This, Grawe said, was to improve electrical service in general, not Temelin in particular.

The World Bank official told RFE/RL the safety audit of Temelin was also part of an overall review of the Czech Republic's utility safety. Again, Grawe said, it was not meant to be specific to Temelin.

"In view of the relevance of that audit to the safety of the whole system and the objectives -- objectives that I quoted you for our project, we agreed to finance that study because we felt that more reliable information on the cost and safety features of the Temelin plant would facilitate the overall reliability of the system."

Grawe says the World Bank does indeed have a policy not to finance nuclear power plants. The reason, he says, is that the bank does not want to duplicate efforts being made by the European Bank for Reconstruction and Development. The EBRD, based in London, was set up a decade ago to help the countries of Eastern Europe and the former Soviet Union make the transition from communist planned economies to the market system.

Meanwhile, the formal World Bank-IMF meetings began Sunday.